IDC Sees Clouds Crossing the Chasm

Thursday Mar 5th 2009 by Andy Patrizio

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Cloud technology is making the big jump from early adopter stage to mass market. How are vendors coping with the issues that remain?

SAN JOSE, Calif.  It may have been pouring buckets here in the largest city in Silicon Valley, but the only discussion about clouds going on in the San Jose Convention Center was about cloud computing.

One of the main lectures here yesterday at IDC's Directions '09 conference centered around what vendors must do to prepare for cloud computing as a new growth market, one that will affect the industry for the next 15 to 20 years, if IDC's predictions are correct. IDC has given similar advice to IT professionals as well.

Cloud computing will account for 25 percent of the net growth of technology from 2011 to 2012, and 30 percent of growth from 2012 to 2013, according to Frank Gens, senior vice president and chief analyst with IDC. Growth for now is slow because it's still in the early adopter stage, but once it moves beyond that, it will accelerate rapidly.

For that reason, he told the audience full of executives from major IT firms and consultancies they must quick to respond to customer demands. The No. 1 reason companies large and small look to deploy a cloud environment is because they expect it to deliver fast deployment  faster, at least, than doing on-premises deployments on their own.

"Businesses depend on technology. Their markets move quickly. The last thing they will tolerate is when they want to move with the market and the systems can't move with it," Gens told the audience.

Citing Geoffrey Moore's seminal work "Crossing the Chasm," Gens said the current adoption rate for clouds is around the 15 percent range, which is where early adopters and visionaries are found on the bell curve of adoption.

But Moore's bell curve has a split between the early adopters and the mass market -- the "chasm" he refers to in the book.

Clouds, said Gens, are beginning to make the journey across.

"Right now, we're at the chasm. We're leaving the left side and hopefully not falling into the chasm, and starting to drift across," he said. "What will it take to get us across the chasm. What do you want cloud suppliers to do?"

The answer is competitive pricing, performance level assurances, an understanding of the specific business a customer is in, and the ability to move data not only out to the cloud, but back on premises.

There is, of course, doubt over cloud computing, much of it centered around security issues. Since the data is not on the customer's premises, they are concerned about its security and are not certain it will always be there.

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What if the provider goes down? Salesforce.com, for instance, has suffered a few outages.

Yet Gens noted that "over half of the market has inferior security than these cloud services providers. For them, it's an improvement to go to cloud services."

The usage models for cloud services are going to get rich, with an explosion of cloud topologies that the cloud enables. Firms will need to offer specific, vertical services for industries, like banking or retail or manufacturing, in addition to generalized, broad services.

"Where this takes off is when a customer can come to these services and feed a wide range of business options," Gens said. "There needs to be a 'micro-verticalization' of solutions." These are vertical, industry-specific services but with a new delivery model  on-demand instead of installed.

Plus, not everyone will benefit from cloud computing, so vendors shouldn't be selling it to a company that doesn't need it, he added.

"Companies need to focus on where the cloud computing model is capable of offering customers the features they need and for whom the cloud model offers the greatest advantage," he said.